It is the duty of the Co-operative Banks and Credit Institutions to provide information

H.H. (Adv.) Suresh Kulkarni

A Bank Association in Maharashtra’s Jalgaon District had filed a petition in the Aurangabad Bench of the Bombay High Court saying, ‘According to the Banking Regulation Act, it is not mandatory for us to provide information if requested through the Right to Information (RTI) application’. The arguments in the Court, the intervention petition filed by the Hindu Vidhidnya Parishad and the judgment of the Bombay High Court are discussed here.

1. Petitioners contend that Co-operative Banks and Credit Institutions are not within the ambit of the RTI Act

A petition was filed by the Association of Jalgaon District Urban Co-operative Banks, Credit Societies and other Financial Institutions at Jalgaon, Maharashtra in the Aurangabad Bench of the Bombay High Court. The petition read – ‘The Co-operative Banks and Credit Societies are not Government Institutions (Public authority). Therefore, they do not come under the ambit of Section 2 (h) and Section 8 of the RTI Act. Since the information they have is confidential in nature, they are not bound to provide information if someone asks for it through a Right to Information application as per Section 34 of the Banking Regulation Act, 1949.

2. The petitioners argued and made various demands to prove that they are not bound by the RTI Act

While arguing in Court, the petitioners said, ‘Co-operative Banks do not directly or indirectly take any funds or get any financial aid from the Government. Therefore, it is not mandatory for them to provide information under the RTI’. The petitioners demanded that the Court issue the following directives.

Co-operative Banks, Financial Institutions, Credit Institutions and other Co-operative Societies and Credit Societies registered under the Maharashtra Co-operative Societies Act, 1960 (Maharashtra Co-operative Societies Act) do not fall under the category of Institutions mentioned under Section 2 (h) and Section 8 (d), (e) and (j) of the RTI Act. Hence they are excluded from disclosure of information.

Even though it is all so clean and clear, the Co-operative Department officials ask for information. “In view of the commercial interest of the Co-operative Credit Institutions and Financial Institutions, an order should be passed by the Court that the above-mentioned Institutions are not bound to provide the information of Co-operative Banks, Credit Institutions and any Institution under them to the officers of the Co-operative Department or to the general public.”

Pending the hearing and decision on this petition, the Honourable Court should issue directives that, the officers or subordinate employees of the aforesaid offices are not bound to furnish any information other than the balance sheet and profit and loss statement of the Co-operative Financial Institution to the officers of the Co-operative Department due to confidentiality reasons. Actually, the Bombay High Court gave them an injunction due to which the officers of the Co-operative sector could not ask them for information. Subsequently, such an order was passed by the Government with reference to the injunction of the High Court.

3. An intervention petition filed by the Hindu Vidhidnya Parishad

An intervention petition was filed by Advocate Virendra Ichalkaranjikar (National President of Hindu Vidhidnya Parishad), which said that, since the Right to Information is applicable to all organisations, it cannot be avoided only on the basis of the criterion that the organisation does not seek or receive any financial assistance from the Government. Along with this, it was said that no relief can be given under the laws of ‘Maharashtra Co-operative Societies Act, 1960’ or ‘Banking Regulation Act, 1949’. The RTI Act is a special law and is binding on all. Confirming this statement, Advocate Virendra Ichalkaranjikar presented the judgment of the Supreme Court in the year 2016, in the case of ‘Reserve Bank of India Vs. Jayantilal Mishri’.

4. The Supreme Court rejected all the arguments of the petitioners

In the said judgment, the Supreme Court studied the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934, the Credit Information Company Act, the State Bank of India Act and the Official Secrets Act, 1923, etc. Article 19 (1A) of the Constitution and Article 8 of the RTI Act, and the argument of ‘’relationship of fiduciary’ made by the Banks was also considered. On this, the Supreme Court rejected the ‘relationship of fiduciary’ argument raised by the Reserve Bank of India. It also rejected that ‘Reports of Banks and Co-operative Societies are confidential; hence customers trust them’. The statement that information cannot be provided under RTI while protecting the consumer’s interest was also rejected.

5. Judgment of the High Court

While hearing the arguments of the Hindu Vidhidnya Parishad under the intervention petition, the Bombay High Court made the following observations :

A. The Reserve Bank of India is a Statutory Regulatory Body and has jurisdiction over all Financial Institutions : Therefore, it should use its authority not only for the interests of the Financial Institutions, but also for the people, i.e. public interest.

B. Banks should show transparency in transactions : It is important for the Reserve Bank of India to consider the ‘relationship of fiduciary’ between itself and other Financial Institutions, their duties towards the public, public interest and its safeguarding. It is more important to protect the interests of customers who keep their deposits in these Financial Institutions. Apart from this, there should be transparency in the functioning of the Reserve Bank of India, other Banks and Financial Institutions. Therefore, the ‘RTI Act’ is binding on all the mentioned Banks and Financial Institutions. It is their duty to provide information requested through a RTI application. According to Section 8 (1) (e) of the RTI Act, it is the duty of any organisation to provide all documents except some exceptional documents which are not required to be provided by the organisation. These Financial Institutions need to demonstrate in their actions that their transactions are transparent, valuing the trust or loyalty that customers place in the Banks.

C. Between the interests of the public and the Bank or Institution, only the interest of the public should be given importance : The RTI Act has been made specifically for this purpose. Various Banks, Co-operatives and Financial Institutions do not provide information under the RTI by citing ‘Section 8’ of the Act. Section 2 of the RTI Act is important. It includes providing information on inspection reports, memos, E-mails, consultants’ instructions, press releases, circulars, copies of orders, log books, contract documents, sample letters, sample filings, electronic media and private organisations.

D. It is the duty of the Financial Institutions to provide information requested by the customers : Referring to this judgment of the Supreme Court, the Aurangabad Bench of the Bombay High Court also said, ‘The Institutions which are registered under the Maharashtra Co-operative Societies Act, all the plaintiff Banks which have filed writ petitions in the High Court in which the public invests and distributes those funds, should protect the interests of consumers as per law. Hence, these Institutions cannot refuse providing information under RTI just because they have not received funds in the form of aid from the Central or State Governments.

The High Court referred to this as one of the guiding principles of State policy under Articles 38, 39, 43 and 48 of the Constitution. The High Court once again held that the documents mentioned above in Section 2 of RTI must be given to the applicants. Therefore, the Aurangabad Bench of the Bombay High Court clearly directed that it is the duty of these Financial Institutions to provide information requested by the customers to the Registrar or his subordinates who are working under the policy of the Co-operative Societies and who have control over these Banks. Along with this, the writ petitions of various working Banks were dismissed and the intervention petition was decided by considering the intervention application of Hindu Vidhidnya Parishad and the position taken in it regarding RTI.

Because of this judgment, it is only the RTI Act which ensures that the Banks and Co-operative Societies protect the interests of their customers.

6. Due to the judgment of the High Court, the interests of the common consumers will be preserved

This judgment has far-reaching implications because loans are distributed by the Banks and Co-operative Societies under the influence of political leaders or parties, which wrongly exercise undisclosed and unlimited powers over these Co-operatives. As a result, these Institutions (which run on the hard earned investment of the public) become bankrupt within a few days.

Against this backdrop, the RTI can confirm whether the transactions of these Banks and Co-operative Societies are transparent, their loans are not wrongly distributed and their recovery is prompt, and whether the Banks protect the interests of their customers and their funds.

II Shrikrushnarpanamastu II
– H.H. (Advocate) Suresh Kulkarni  (Founder Member, Hindu Vidhidnya Parishad and Advocate in Bombay High Court)

Loans are given under the influence of political leaders, who wrongly exercise unlimited powers over Co-operatives !